Wrap Text
Unaudited interim financial statements and cash dividend declaration for the six months ended 31 March 2024
REUNERT LIMITED
Incorporated in the Republic of South Africa
Registration number: 1913/004355/06
JSE and A2X share code: RLO
ISIN code: ZAE000057428
("Reunert", "the Group" or "the Company")
Unaudited condensed consolidated interim financial statements1
and cash dividend declaration for the six months ended 31 March 2024
The contents of this announcement are the responsibility of the board of directors of the Company (the Board). Shareholders are advised that this
announcement does not contain full or complete details and represents a summary of the information contained in the full announcement, which is accessible
via the JSE cloudlink at https://senspdf.jse.co.za/documents/2024/JSE/ISSE/RLO/Interim_24.pdf and on Reunert's website (https://reunert.co.za/reporting-
and-results.php) from 22 May 2024. Shareholders and investors are advised to review the full announcement in making any investment decisions.
SALIENT FEATURES
31 March 31 March
2024 2023 %
Group revenue (Rm) 6 642 6 203 7
Operating profit (Rm) 674 620 9
Attributable Profit (Rm) 459 412 11
Headline earnings per share (cents) 289 267 8
Earnings per share (cents) 289 259 12
Interim dividend per share (cents) 90 83 8
Reunert is pleased to present its results for the six-month period ended 31 March 2024 (H1 FY: 2024), which reflected another set of solid results as the
Group continued to deliver on its financial, operational and strategic initiatives.
Overview
The South African macro-economic conditions facing the Group remained challenging during H1 FY: 2024. Of particular impact were the national port and
logistics disruptions that developed rapidly and persisted throughout the reporting period. The management teams responded well to these challenges and
managed their operations to meet most customer commitments. Unfortunately, our Total Workspace Provider, under the Nashua brand, business was unable to
resolve the logistics challenges during H1 FY: 2024, which resulted in a noteworthy shortfall of imported product and led to a large reduction in sales and
operating profit in the period, which negatively impacted the ICT Segment's and Group's results.
In addition, and as guided in our 2023 financial year-end results communication, the residential and small commercial battery market became saturated, which
resulted in volume and margin compression at the Battery Storage business and necessitated the business being restructured and refocused to take advantage
of the improved large battery market. This resulted in a marked reduction of this business' contribution to revenue and operating profit in the Applied
Electronics Segment.
Group results
Despite the two challenges described above, the remainder of the Group performed well, and the Group's revenue increased by 7% to R6,6 billion from the R6,2
billion achieved in the six-month period ended 31 March 2023 (H1 FY: 2023).
The Group's 9% increase in operating profit to R674 million (H1 FY: 2023: R620 million) was driven by the strong results in the Electrical Engineering
Segment and the Applied Electronics Segment's Defence Cluster.
The Group continued to generate strong free cash flow which resulted in a decrease in net interest paid and which helped boost profit for the period by 13%
to R475 million (H1 FY: 2023: R422 million). Similarly, the Group's earnings per share and headline earnings per share increased by 12% and 8%,
respectively.
Cash resources and liquidity
The high level of sales made in the second quarter of the 2024 financial year and the investment in working capital required to address the port congestion
referred to under "Overview", resulted in a R201 million increase in working capital during the period under review.
After absorbing the impact of the working capital investment, the Group positively generated free cash flow of R476 million (H1 FY: 2023: R298 million).
This, together with the impact of the new longer-term facilities raised and the R141 million received in respect of the sale in the 2023 financial year to
Lumika Renewables (Pty) Ltd of Terra Firma Solutions (Pty) Ltd, resulted in the net cash on hand increasing from R1 171 million at 30 September 2023 to
R1 299 million at 31 March 2024.
The positive cash generation, which is expected to continue through the second half of the 2024 financial year (H2 FY: 2024), together with the unutilised
banking facilities available to the Group and the cash on hand, provides the necessary financial resources to meet the Group's operational and strategic
initiatives and support dividend payments.
Segment review
Electrical Engineering
Both Power Cable businesses performed well on the back of increased production volumes. These businesses leveraged the increased volumes to generate
operational efficiencies which together with a better product mix in Zambia and lower foreign exchange rate losses, yielded improved margins and higher
operating profit.
The Circuit Breaker business delivered steady product volumes and, positively, increased exports to the USA which offset weaker economic growth in
Australia.
ICT
The negative impact of the port congestion on Nashua, described under "Overview" above, weakened an otherwise solid performance by the segment as SkyWire
(Pty) Ltd (last mile broadband connectivity), Plus 1X Solutions (Pty) Ltd (digital integrator) and Quince Capital (Pty) Ltd (Quince) all delivered improved
results. Collections in the channel remained well managed and Quince's lease and loan receivables book is appropriately provisioned against the economic
conditions facing the segment.
Applied Electronics
Renewable Energy
The cluster's Solar Energy business had a strong performance as build rates, margins, solar energy assets under ownership (BOO) and BOO performance all
improved. The Battery Storage business has secured several large battery storage contracts and is expected to deliver an improved performance in H2 FY:
2024.
Defence
The Defence Cluster delivered a strong performance as the cluster executed on its large order book. The increased volumes resulted in improved factory
throughput and efficiencies which together with a good product mix and stable foreign exchange rates yielded improved operating profit margins for the
cluster. The Fuze, Radar, Secure Communications, Logistics businesses and Etion Create (Pty) Ltd all delivered strong performances in H1 FY: 2024.
Importantly, the cluster's order books remained at levels similar to those experienced at 30 September 2023, which provides encouraging visibility on the
cluster's expected positive financial performance throughout the remainder of the 2024 financial year and into the 2025 financial year.
Prospects
Reunert continues to expect that an improved financial result in 2024 can be delivered. Whilst the pressure in the South African facing businesses has
increased since the 2023 financial year-end position, the Group's results are anticipated to be positively supported by:
- the incorporation of IQ Business (Pty) Ltd and its subsidiaries' results for a full 12 months;
- the continued positive Defence Cluster's sales on the back of the strong order book; and
- solid Electrical Engineering growth.
Cash dividend
The Group's cash generation continues to be sufficient to meet operational and strategic requirements and support the dividend. Notice is hereby given that
a gross interim cash dividend No. 196 of 90,0 cents per ordinary share (March 2023: 83,0 cents per ordinary share) has been declared by the Board for the
six months ended 31 March 2024.
The dividend has been declared from retained earnings.
A dividend withholding tax of 20% will be applicable to all shareholders who are not exempt from, or who do not qualify for, a reduced rate of withholding
tax.
Accordingly, for those shareholders subject to withholding tax, the net dividend amounts to 72,0 cents per ordinary share (March 2023: 66,4 cents per
ordinary share).
The issued share capital at the declaration date is 184 969 196 ordinary shares.
Income tax reference number: 9100/101/71/7P.
In compliance with the requirements of Strate (Pty) Ltd and the Listings Requirements of the JSE Limited, the following dates are applicable:
Last date to trade (cum dividend) Tuesday, 18 June 2024
First date of trading (ex dividend) Wednesday, 19 June 2024
Record date Friday, 21 June 2024
Payment date Monday, 24 June 2024
Shareholders may not dematerialise or rematerialise their shares between Wednesday, 19 June 2024 and Friday, 21 June 2024, both days inclusive.
On behalf of the Board
Mohamed Husain Alan Dickson Nick Thomson
Chairman Chief Executive Officer Chief Financial Officer
Sandton, 21 May 2024
1 Extracted financial information from the unaudited condensed consolidated interim financial statements for the six months ended 31 March 2024.
Directors
MJ Husain (Chair)*, T Abdool-Samad*, RJ Boettger*, GB Dalgleish*, AE Dickson (Chief Executive Officer), TNM Eboka*, LP Fourie (Chair of the Audit
Committee)*, JP Hulley*, S Martin*, Dr MT Matshoba-Ramuedzisi*, M Moodley, NA Thomson (Chief Financial Officer).
* Independent non-executive
Registered office
Nashua Building
Woodmead North Office Park
54 Maxwell Drive
Woodmead, Sandton
PO Box 784391
Sandton, 2146
Telephone +27 11 517 9000
Investor enquiries
Karen Smith
E-mail invest@reunert.co.za.
For more information log on to the Reunert website at
reunert.com
Sponsor
One Capital Sponsor Services Proprietary Limited
17 Fricker Road, Illovo, 2196
22 May 2024 (publication date)
Date: 22-05-2024 12:00:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
